Tribe Must Arbitrate Embezzlement Claims

     (CN) – The Miccosukee Indians must arbitrate claims a former tribal chairman embezzled millions from its Morgan Stanley accounts, a federal judge ruled.
     The ruling, levied last week in Miami, centers around Billy Cypress, former chairman of the Florida-based tribe, and his relationship with the financial firm.
     Cypress “mishandled and misappropriated” the funds “with the assistance of” Morgan Stanley Smith Barney, the Miccosukee claimed – citing fraud, breach of fiduciary duty, embezzlement, civil theft and racketeering violations against eight defendants, including the multinational bank.
     Morgan Stanley countered that the claims could not be heard in court due to arbitration clauses in account applications and client agreements that Cypress executed when he opened the accounts.
     One such clause, according to the ruling, states: “All parties to this agreement are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.”
     Cypress “oversaw, controlled, supervised and had unrestricted access and control over all the financial finds and records of the Miccosukee Tribe” from 2005 to 2009, the 10-page ruling adds.
     The tribe, in opposition, said, “Cypress, as the main co-conspirator in embezzling and misappropriating millions of dollars of the Miccosukee Tribe’s funds for his personal gain, was without authority to bind the Miccosukee Tribe, absent the knowledge and consent of the Miccosukee Tribe’s General Counsel, to arbitration.” U.S. District Judge Marcia Cooke, however, sided with Morgan Stanley due to the contracts.
     “Neither party disputes that the validity and enforceability of the arbitration provision itself in the client agreements,” Cooke said. “Nor do the parties dispute that the claims at issue against Morgan Stanley Smith Barney are arbitrable under the applicable provision.”
     “(T)he Miccosukee Tribe allowed defendant Cypress, without objection, to oversee, control, supervise and have unrestricted access to all financial funds and records of the tribe. With this unfettered control and access, the Miccosukee Tribe permitted Morgan Stanley Smith Barney to believe that defendant Cypress had the authority to establish accounts and execute contracts attendant to the establishment of the financial accounts. …
     “Given that defendant Cypress had the legal authority to bind the Miccosukee Tribe in commercial contracts at the time he entered the client agreements with Morgan Stanley Smith Barney, the client agreements must be enforced against the Miccosukee Tribe,” Cooke added.
     Cooke ruled Cypress had the “requisite legal authority” to enter into the arbitration agreement with Morgan Stanley on behalf of the Miccosukee Tribe.
     “Therefore, the Miccosukee Tribe must arbitrate its claims against Morgan Stanley Smith Barney,” the ruling states.

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